Price Power

Whilst procrastinating this Christmas and accompanying my mum to Costco to (search for tasters) help with the Christmas shopping, my mum pointed out a large bottle of vanilla essence and told me to write about this for my next blog post. The point of interest about this bottle of vanilla essence ( apart from being the biggest bottle of vanilla essence I'd seen available for personal use) was the price. More specifically, the price compared to the last time my mum purchased this bottle of vanilla essence. She had paid no more than £7 in the past for the same product that now cost £29.99.

In fact, this problem is not just an example of a price hike from Costco. Indeed I remembered over the summer on the rare occasion I would venture onto Facebook I was met with videos warning me that my vanilla ice cream eating days may soon be over, largely the result of crop destruction in Madagascar, the primary producer of the very fragile Vanilla plant. By March 2018, Vanilla was worth more than silver.

How does this happen? This vanilla catastrophe is a great indicator of the power of prices. Prices, as championed in an article from my first year of economics study, are so important because 'prices contain information.' The information provided by prices shows us that certain resources (the more expensive ones) are scarce. Prices also illustrate the relative scarcity of resources. In the case of vanilla, the price hikes are largely due to crop uncertainty resultant from environmental irregularities hindering harvest. This small case study of a relatively trivial product thus provides important illustrations of how climate change can and will impact the consumer. Apart from the devastating impact of increased occurrences of natural disasters on locals and the displacement of an estimated 300 million people, consumption patterns will be forced to change as crops become more scarce and unable to survive in new climate conditions. These rising prices should be taken as a warning and a reminder of the real impacts climate change can hold for everyone regardless of whether their country will 'escape' the brunt of environmental change. If we act proactively, work to reduce human impact on the environment and continue to lobby government action then maybe, just maybe we can save the vanilla ice cream, as well as the planet.

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